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Top Story Compliance Related

12/13/2021

OFAC targets abusers of human rights

On Friday, International Human Rights Day, Treasury announced that OFAC had designated 15 individuals and ten entities for their connection to human rights abuse and repression in several countries around the globe. Separately, OFAC imposed investment restrictions on one company in connection with the surveillance technology sector of the People’s Republic of China’s economy, highlighting the human rights abuse enabled by the malign use of technology.

For a list of the new SDN List designations and the addition to OFAC's Non-SDN Chinese Military-Industrial Complex Companies (NS-CMIC) list, see the December 10, 2021, BankersOnline OFAC Update.

12/13/2021

Fed reiterates expectations for risk management for large banks

In a Supervision and Regulation letter, the Federal Reserve Board on Friday reiterated its supervisory expectations for large banks' risk management with investment funds. The supervisory message follows a review by the Board of the default and failure of Archegos Capital Management, a concentrated and leveraged fund.

The message describes the Board's existing expectations for large banks' counterparty credit risk management and margin practices, as well as existing practices that do not meet supervisory expectations, and identifies ways to mitigate those practices.

12/13/2021

OCC revises Licensing Manual booklets

The OCC has issued Bulletin 2021-60 announcing revised versions of its "Background Investigations," "Capital and Dividends,” "Charters,” “Conversions to Federal Charter,” and “National Bank Director Waivers” booklets of the Comptroller’s Licensing Manual. The revised booklets replace booklets of the same title issued between April 2017 and October 2019. The revised booklets reflect recent changes to 12 CFR 5, make corrections where necessary, and contain updated guidance.

12/10/2021

OFAC adds sanctions on Anti-Corruption Day

The Treasury Department yesterday announced that OFAC has targeted fifteen individuals and entities across several countries in Central America, Africa, and Europe. Yesterday’s actions were taken under authority of Executive Order 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act and targets perpetrators of corruption and serious human rights abuse. OFAC’s actions were complemented by the U.S. Department of State’s announcement of visa restrictions under Section 7031(c) of the Department of State, Foreign Operations, and Related Programs Appropriations Act, targeting several corrupt current and former officials, as well as their immediate family members, and making them ineligible for entry into the United States.

International Anti-Corruption Day has been observed annually on December 9 since the United Nations General Assembly adopted the United Nations Convention against Corruption on October 31, 2003, to raise public awareness of the importance of anti-corruption initiatives in countering corruption and preventing it from undermining democratic institutions, eroding governmental stability, and slowing economic development.

For the names and identification information of the seven individuals and eight entities designated, and one previously designated party whose listing was updated yesterday, see the December 9, 2021, BankersOnline OFAC Update.

12/09/2021

Hsu's remarks on reforming overdraft programs

On Wednesday, Acting Comptroller of the Currency Michael J. Hsu spoke at the Consumer Federation of America's 34th Annual Financial Services Conference on the topic "Reforming Overdraft Programs to Empower and Promote Financial Health."

In concluding his remarks, Hsu shared several features of bank overdraft programs that the OCC staff have identified that could support consumer financial health, including banks:

  • requiring consumer opt-in to the overdraft program.
  • providing a grace period before charging an overdraft fee.
  • allowing negative balances without triggering an overdraft fee.
  • offering consumers balance-related alerts.
  • providing consumers with access to real-time balance information.
  • linking a consumer’s checking account to another account for overdraft protection.
  • collecting overdraft or NSF fees from a consumer’s next deposit only after other items have been posted or cleared.
  • not charging separate and multiple overdraft fees for multiple items in a single day and not charging additional fees when an item is re-presented.

12/09/2021

OFAC settles with individual for $134K

OFAC has issued an Enforcement Release announcing a U.S. person has agreed to pay $133,860 to settle their potential civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations. The apparent violations were committed between February 2016 and March 2016 when the U.S. person accepted payment in the United States on behalf of an Iran-based company selling Iranian-origin cement clinker (a cement precursor) to another company for a project in a third country. The U.S. person coordinated and further facilitated the sale of the clinker with a family member working at the Iranian cement company by relaying logistical and shipping information to the purchasing company.

The U.S. person had previously submitted a license request to OFAC to authorize other transactions with Iran and had been denied, receiving a list of details of prohibitions involving Iran.

12/09/2021

CFPB reports finding wide-ranging law violations in 2021

The CFPB on Wednesday announced that its Fall 2021 Supervisory Highlights report, issued Wednesday, reveals legal violations identified in the Bureau's examinations in the first half of 2021. Key violations listing in the report include:

  • Mortgage servicers charging improper fees, including late fees and default-related fees, to borrowers enrolled in CARES Act forbearance, and in some cases failed to refund fees until almost a year later.
  • Violations of the Equal Credit Opportunity Act by mortgage lenders who discriminated against African American and female borrowers in the granting of pricing exceptions. In these cases, examiners found the lender lacked oversight and control over how loan officers granted pricing exceptions. Examiners also found lenders who improperly considered small business applicants’ religion in their credit decisions. For religious institutions applying for small business loans, some lenders improperly utilized a questionnaire that contained explicit inquiries about an applicant’s religion.
  • Payday lenders improperly debiting or attempting to debit consumers’ bank accounts. In some instances where consumers called to authorize a loan payment by debit card, lenders’ systems erroneously indicated the transactions did not process, resulting in the improper debiting of additional, identical amounts or unauthorized attempts.
  • Remittance transfer providers failing to investigate whether deductions imposed by some foreign banks constituted a fee that the institutions were required to refund to the sender as part of the error resolution process when a sender filed a claim that funds were not delivered to designated recipients by disclosed availability dates.

12/09/2021

OFAC targets corruption networks linked to TNOs

On Wednesday, Treasury reported that OFAC had targeted 16 individuals and 24 entities across several countries in Europe and the Western Hemisphere. The actions were taken under the authority of Executive Order 13818, which builds upon and implements the Global Magnitsky Human Rights Accountability Act, and targets perpetrators of corruption and serious human rights abuse. The designations targeted the nexus between public corruption and organized crime.

For the names and identification information of the individuals and entities added to OFAC's SDN List, see the December 8, 2021, BankersOnline OFAC Update.

12/08/2021

Treasury targets repression and undermining of democracy

Treasury announced on Tuesday that OFAC has designated 15 actors across three countries in connection with serious human rights abuse and repressive acts targeting innocent civilians, political opponents, and peaceful protestors. In addition, OFAC designated two entities and two individuals that the Department of State has identified as responsible for certain gross violations of human rights in Iran.

For identity information on the individuals and entities designated, see the December 7, 2021, BankersOnline OFAC Update.

12/08/2021

FinCEN proposes Beneficial Ownership Reporting Rule

FinCEN has announced it has published a Notice of Proposed Rulemaking to implement the beneficial ownership information reporting provisions of the Corporate Transparency Act (CTA). The proposed rule is designed to protect the U.S. financial system from illicit use and impede malign actors from abusing legal entities, like shell companies, to conceal proceeds of corrupt and criminal acts. Such abuses undermine U.S. national security, economic fairness, and the integrity of the U.S. financial system.

The proposed rule addresses, among other things, who must report beneficial ownership information, when they must report, and what information they must provide. Collecting this information and providing access to law enforcement, financial institutions, and other authorized users will diminish the ability of malign actors to hide, move, and enjoy the proceeds of illicit activities. The proposed rule also reflects stated concerns in the newly released U.S. Government Strategy on Countering Corruption, which addresses the money laundering risks posed by anonymous shell companies as well as the need to protect the international financial system from abuse by corrupt and other illicit actors. It is also consistent with the efforts of the Financial Action Task Force and G7 and G20 leaders to curtail the ability of illicit actors to hide wealth behind anonymous shell companies.

FinCEN will engage in additional rulemakings to (1) establish rules for who may access BOI, for what purposes, and what safeguards will be required to ensure that the information is secured and protected; and (2) revise FinCEN’s customer due diligence rule following the promulgation of the BOI reporting final rule. In addition, FinCEN is developing the infrastructure to administer these requirements, such as the beneficial ownership information technology system.

The proposal was published on December 8, 2021, in the Federal Register, with comments due by February 7, 2022.

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